U.S. Supreme Court Rules for Microsoft in Patent Dispute with AT&T

May 1, 2007

On Monday, the U.S. Supreme Court said Microsoft is not liable for patent infringement that occurs when copies of Windows are developed and installed abroad.

The Justices were ruling on a patent law doctrine that prohibits U.S. companies from sending "components" to foreign manufacturers- who then combine these components to make computers that infringe on U.S. Patents.

What isn't prohibited is the sending of blueprints that conceivably could be used to build components intended to build a PC by a foreign company overseas.

In Monday's justices ruled 7-1 (PDF) that "abstract software code" shipped by Microsoft to foreign manufacturers in the form of "golden master discs" is a defacto blueprint, not a component of an invention.

The specific case dates back to an AT&T suit against Microsoft back in 2001. A U.S. District Court and the U.S. Court of Appeals for the Federal Circuit both found Microsoft liable not only for violating an AT&T patent covering a "digital speech coder" - not only in computers built in the U.S. but overseas.

"The master disc or electronic transmission Microsoft sends from the United States is never installed on any of the foreign-made computers in question," Justice Ruth Bader Ginsburg wrote for the majority. "Instead, copies made abroad are used for installation."